POON YIU CHEUNG v. WORLD MASTERY TECHNOLOGY LTD

HCMP 2013/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 2013 OF 2011

(ON AN INTENDED APPEAL FROM DCCJ NO. 632 OF 2005)

______________________

BETWEEN

______________________

______________________

D E C I S I O N

______________________

1.  The plaintiff (“Poon Yiu Cheung”) claimed against the defendant (“World Mastery Technology Limited”) for the sum of just over $600,000 being unpaid commission after his engagement by the defendant as a sales representative was terminated.

2.  The defendant disputed liability for the payment of the commission and further claimed to be entitled to a set off and counterclaim on the basis that the defendant was in breach of the implied terms of the agreement and/or his fiduciary duties by diverting the defendant’s business to a third party and by obtaining unauthorized rebates from its customers.

3.  On 10 June 2011, Deputy Judge Yu in the District Court rejected the defendant’s case on set off and counterclaim, saying that the defendant had failed to prove that the plaintiff had been its employee.  The judge gave judgment for the plaintiff for about $330,000, on the basis that he was entitled to commission only up to the date of termination.

4.  On 30 September 2011, the judge further made orders in favour of the plaintiff for interest at an enhanced rate and costs on an indemnity basis.  The judge refused the defendant’s application for leave to appeal.

5.  The defendant, represented by Mr K. M. Chong and Ms Emma Wong, now seeks leave to appeal from this court, saying that the judge had not properly dealt with the issue of breach of fiduciary duties.  The defendant does not, however, challenge the findings that the plaintiff was entitled to be paid the commission.

6.  It is also the defendant’s contention that when dismissing its case for breach of fiduciary duties, the judge had not placed sufficient weight on certain documentary evidence.  Specifically, the defendant complains about the judge’s rejection of the email exchanges between the plaintiff and its former General Sales Manager (“Mr Andrew Tsui”) on the basis that they were “hearsay evidence”.

7.  The defendant further contends that the judge was wrong not to place any weight on the documents supplied by one of its customers on the soliciting and acceptance of rebates by the plaintiff, particularly when the defendant had, in defiance of the order of a Master, failed and/or refused to disclose his bank statements, which could have supported the defendant’s case.

8.  The issues involved in the case concern both disputes of facts and matters of law on the admissibility of evidence, and the inference that could be drawn from the evidence.

9.  Mr Andy Lam, on behalf of the plaintiff, says that the defendant had not properly pleaded a case on breach of fiduciary duties.  He suggests that there could be no fiduciary duties on the part of the defendant when there was no employment relationship.

10.  The undisputed fact was that the plaintiff was a sales representative, albeit a freelance one, and this, in my view, might put him in a fiduciary position vis-à-vis the defendant.  The defendant, in its re-amended counterclaim, did counterclaim for damages for breach of the Agreement and/or fiduciary duties and it is highly arguable that the issue of breach of fiduciary duties had been sufficiently pleaded.  The judge did not appear to have adjudicated on the issue.  There is also the defendant’s counterclaim for an account of the rebates that needs to be properly addressed.

11.  It is not necessary for me to express any definite view on the matters in issue, but I am persuaded that there are matters that should be further examined by the Court of Appeal.

12.  I am persuaded that it is a proper exercise of my discretion to grant leave to the defendant to appeal.

13.  I therefore grant leave to the defendant to appeal with costs of this application to be in the cause of the appeal.